KEEPING CONSUMERS INFORMED OVER THE CHICKEN, EGG AND PORK SUPPLY SITUATION IN THE LIGHT OF INCREASING COST OF PRODUCTION

The FLFAM would like to inform the public that the livestock industry, particularly the poultry and pig sectors are encountering another surge in the cost of production. The latest increase in the price of compounded feed was triggered by the decision of the Government of India to prohibit the export of corn (maize) from the 3^rd of July to the 15^th of October 2008. Since November 2007 Malaysia has largely been dependent on Indian corn as it offers a significant discount to corn prices imported from the United States (US).

In the light of the above the feed-millers have already announced prices increases twice during the month of July 2008 totaling RM180 per metric ton. This has resulted in the calculated cost of production of broilers increasing to RM4-87 per kilogram of live bird produced at the farm level. It is likely that further feed price increases will be announced in the coming months.

Consumers ought to take note that price increases continue to take place even as significant quantities of corn has become available from Thailand. Corn is still not available from Argentina due to the farmers’ strike over their government’s imposition of export tax. The members of the FLFAM are making every effort to conserve the existing feed resources in stock and may be just sufficient to tide them over until new shipments arrive and the ban on the Indian corn is lifted in mid October 2008.

It is also important to be reminded that the cost of production does not reflect the price obtained by the producers. It is still the supply and demand balance that determines the price obtained by the producers. Even the fear of high cost of production can trigger lower demand of the produce as consumers cut back in consumption resulting in a mismatch of supply & demand situation. This situation will end up whereby farmers will be getting low prices for their produce even though their cost of production is extraordinarily high. This is the conundrum the farmers are bracing for in view of the time tested supply and demand mechanism in action..

It is also important to note that Malaysia is not the only country affected by the import ban by India as many other Asian countries were importing from that country also and an estimated 500,000 tons of corn export commitments were frustrated by the ban on exports.

MR KWEI YEW TONG, BROILER UNIT CHAIRMAN, FEDERATION OF LIVESTOCK FARMERS’ ASSOCIATIONS OF MALAYSIA

15/7/2008